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18 September 2012
The recent Royal College of Physicians report has highlighted the pressure facing hospitals. With rising costs, greater demand and shrinking budgets, a number of NHS hospitals will struggle to balance the books and improve quality. In February 2012 Hinchingbrooke became the first NHS hospital to be managed by an independent provider. Given their early success, this model of outsourcing management offers a potential solution for other hospitals in serious deficit with problems in delivering consistent high quality care. It offers one possible solution to the challenges facing South London Healthcare NHS Trust, which has been taken into administration after running up deficits of over £150 million over the past three years.
To explore the opportunities offered by outsourcing management to a private sector organisation, Reform hosted a seminar with Ali Parsa, Managing Partner of Circle. The lunch was held under the Chatham House rule, but these were the headline points:
The changes at Hinchingbrooke emanated from strong management. Leaders send signals through organisations and put into place the structures and cultures that create the conditions for change. Whilst most healthcare staff have little to no knowledge of their hospital’s business plan, 1,200 out of 1,700 of Hinchingbrooke’s workforce volunteered to be involved in consultations to create a new business plan. Total workforce engagement creates the best environment to encourage change and reform. The use of performance and outcomes data is a way to engage and have tough evidence-based conversations with all staff, whether caterers or clinicians. Letting the members of the team recognise their problem and identify solutions encourages a stronger culture of accountability.
Circle has used their resources at Hinchingbrooke and across the country to provide peer support, buddying and benchmarking in order to improve performance. For example, Circle has parachuted in clinical and managerial partners from around the country to lead the reconfiguration of services, drive efficiency in pathways and extend “out of hours” services. When local doctors resist change as impossible, partners from elsewhere were brought in to prove otherwise. When doctors have said that they can’t or don’t want to work “out of hours”, nurses have confronted them with their own work schedules. The hospital is attempting to change the culture that has the hospital revolving around the needs of its workforce, rather than its patients.
However, existing national structures have limited Circle’s ability to improve Hinchingbrooke. The inflexibility of national workforce contracts is a major barrier to developing high performance organisations. The assumption that the discretionary increments in Agenda for Change are in fact pay rises to which everyone is entitled on an annual basis is exceptionally difficult to confront. The difficulties in firing poor-performing staff, particularly doctors, hamper effective quality improvement.
Finally, local health economies must be opened up much more to competition on the basis of quality. The healthcare system limits the ability of providers to expand their market share, thus disincentivising productivity. Instead, providers, both public and private, should be allowed to expand, develop chains and federations, and takeover other institution, spreading best practice and gaining from economies of scale.
By outsourcing management to Circle, Hinchingbrooke has improved many areas of performance in just six months. In June, Hinchingbrooke was rated joint top of 46 acute hospitals in the East and Midlands in the first “friends and family test”, when patients were asked “how likely is it that you would recommend this service to friends and family?” However, despite significant improvements, national frameworks continue to act as a barrier to change. The workforce is inflexible and neither public nor private providers of healthcare are able to competitively expand. Until these national structures are reformed, advances in healthcare will continue to be held back.
Reform roundtable seminars on “Hinchingbrooke NHS Hospital: Lessons from the first six months”, with Ali Parsa, Managing Partner, Circle, on Thursday 13 September 2012.